Monday, September 22, 2014

Great article on the number of people living paycheque to paycheque and what they can do about it.

I came across this great MoneyWise Blog article about the number of Canadians living paycheque to paycheque and what can be done to find some savings in a budget.

Saving is important because you need your rainy day fund intact before you can save to invest.


How to Stop Living Pay Cheque to Pay Cheque

How to stop the paycheque-to-paycheque cycle.
By Andrew Seale
With files from Melanie Epp
Try as they might, many Canadians are working hard for little gain, according to a new survey by the Canadian Payroll Association.
Around half of those polled say it would be a challenge to meet their financial obligations if their paycheque was delayed by a week and even more – 63 per cent – of young adults aged 18 to 29 are living paycheque to paycheque.
It’s a tough space to be in, says Christine Canning, head of everyday banking at BMO: “It can be overwhelming and very scary,” she says.
BMO’s Rainy Day Survey found similar results, with a quarter of Canadians only having $2,051 in emergency funds – not nearly enough to cover an unexpected health incident or weather a job loss for more than a month.
How can you break the vicious paycheque-to-paycheque cycle? Check out our top tips:

It’s the Little Things

Turns out, breaking the cycle is all about frame of mind – and taking some baby steps. “A lot of us know instinctively what the right things to do are, but knowing what they are doesn’t make it easy to actually do them,” Canning says.
The key is taking a less overwhelming perspective. “Change it from ‘oh my god, I’m supposed to have three to six months of savings stored away, I could never do that,’ to ‘I wonder if I could find 10 dollars a week.’”
As with any financial decision, whether it be tackling debt, contributing to an RRSP or saving, you need to realize that each little decision will add up to a greater whole.
“You don’t have to have a huge amount of money in order to, over time, make a huge amount of difference,” Canning says.

Step 1: Know What You Owe

Taking some time to get to know what you owe can help you decide where to draw a line between your wants and needs. “If you’re someone who finds budgeting intimidating, don’t choose a whole bunch of numbers chose one,” says Canning. For instance, add up all your expenses from debt to rent and groceries and figure out what’s left after you’ve used your paycheque on those bills. Allot a portion of that for non-essential spending and a portion for saving. [CLICK TO CONTINUE TO ARTICLE PAGE, THERE ARE 7 STEPS IN TOTAL]

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